With oil prices below Russia’s budget break-even point and over 20 percent of global oil demand wiped out by the coronavirus pandemic, Russian oil firms could be ready to participate in a global production cut deal with Saudi Arabia, the United States, and other major producers, sources familiar with the matter told Bloomberg.
Russian oil firms, which did not increase production this month as promised weeks ago when the OPEC+ deal collapsed, have signaled a readiness for global coordinated action to stop the price crash, as the demand destruction during the lockdowns from India to the U.S. turned out much more than initially thought, according to Bloomberg’s sources.
Four sources at Russian oil firms told Bloomberg that they could be ready to agree to some kind of a three-way deal among Russia, Saudi Arabia, and the United States.
Two weeks ago, Russia was dismissing all calls for and reports about returning to the negotiating table, confident that it would outlast Saudi Arabia in the oil price war.
However, the global oil demand outlook has become more and more pessimistic by the day, with some analysts expecting the demand loss in April at 30 million bpd – nearly a third of the world’s typical consumption of oil.
Russia’s President Vladimir Putin is slated to hold a video call with oil executives from the local firms later on Friday to discuss the “unfavorable” situation in the oil market, Putin’s press secretary Dmitry Peskov said .
Last Thursday, Peskov told reporters that no one had launched any talks about a potential new oil-production deal to replace the OPEC+ format, but noted that “no one is happy” with the current oil price.
The current prices of Brent Crude are well below Saudi Arabia’s fiscal break-even price of $80 a barrel oil, below the break-evens of nearly all U.S. shale production, and below the Russian breakeven price, too. Shortly after Kremlin’s spokesman said no talks were being held, U.S. President Donald Trump said that he hoped and expected that Saudi Arabia and Russia would “cut back approximately 10 Million Barrels, and maybe substantially more,” while OPEC’s top producer and de facto leader Saudi Arabia called for an emergency meeting of OPEC+ and “another group of countries” to try to find “a fair solution” to the current market imbalance.
The video meeting will be held today, and the U.S. oil regulator will also be invited to take part in the discussions.